The most dramatic increases were not in the usual places.
The most troubling reality of America’s ongoing economic recovery has been just how differently the recession and recovery have played out for the wealthiest households and for everyone else. The rich are getting richer, and income inequality is growing. In 2012, the top 10 percent took home more than half of the entire country’s income.
Income inequality is a big and growing problem across the United States, but it's much worse in some places than others. In metros like New York, Detroit, San Francisco, and L.A., income inequality levels rival those of developing world nations like Swaziland, the Philippines, Madagascar, and the Dominican Republic. In a previous post, I traced how income inequality has grown in each U.S. state over the past few decades.
Today, I’ll look at how income inequality has grown in different U.S. metros over the course of the recession and recovery. My Martin Prosperity Institute (MPI) colleague Charlotta Mellander crunched the numbers on the changing levels of income inequality in the country’s 350-plus metro areas as tracked by the Gini Index, a standard measure of the distribution of income across a population. It is calculated on a scale of 0 to 1, and a higher Gini coefficient means that a metro is more unequal. We tracked changes in income inequality levels from 2006, before the crash, to 2012.
The first map shows the level of income inequality based on Gini coefficients for 2006. Before the recession, inequality was worst in huge swathes of the South, including several metros in Alabama, Mississippi, and Louisiana; Houston; Miami; New York; and along the California coast. There were actually several metros where the Gini coefficient was below 0.40 in 2006, indicating more city-wide equality. Many of these were in the northern parts of the Midwest and the Great Plains, including several Wisconsin, Michigan, and Wyoming metros.
The second map charts metro income inequality in 2012. Six years later, the overall distribution is similar, but inequality had worsened considerably in many parts of the South, Northeast, and some larger Rustbelt metros like Detroit, Chicago, and Cleveland.
Income inequality based on the Gini coefficient topped 0.50 or more in 19 metros, with Sebastian-Vero Beach, Naples, and Gainesville in Florida; Bridgeport, Connecticut; and Albany, Georgia at the top of the list. Inequality is also especially high in the large metros of New York, Miami, and New Orleans, plus several college towns, including Ithaca, New York; Morgantown, West Virginia; Columbia, Missouri; Athens, Georgia; and College Station, Texas.
The metros with the lowest inequality levels based on the Gini coefficient were scattered throughout the Great Plains. There were three metros with Gini coefficients below 0.40: Fond du Lac, Wisconsin; Ogden-Clearfield, Utah; and Dover, Delaware.
But which metros have seen the biggest increases in inequality?
The third map shows the change in income inequality between 2006 and 2012. Income inequality increased in just under two-thirds of all metros—226 in all.
New Orleans, Jacksonville, Salt Lake City, and Atlanta, among large metros, saw inequality rise the most. But the largest absolute increases in inequality occurred mainly in smaller metros in the South and throughout the middle of the country, including Columbia, Missouri; Wausau, Wisconsin; Ithaca, New York; Dalton, Georgia; St. George, Utah; Lewiston-Auburn, Maine; Corvallis, Oregon; Grand Forks, North Dakota; Hanford-Corcoran, California; and Anderson, South Carolina. In contrast, inequality only nudged up slightly in New York, D.C., L.A., San Jose, San Francisco and Boston.
The final map cuts these numbers a little differently, looking at the percentage change in income inequality from 2006 to 2012.
The metros with the largest percentage growth in income inequality, shaded in blue, are mainly smaller metros such as Wausau, Wisconsin, where the Gini Index grew by 18 percent, to 0.46. Metros in upstate New York, the upper South and Midwest, and parts of Arizona, Utah, Nevada, California and Oregon—many of which were hard hit by the Great Recession—also saw notable percentage growth in inequality.
Among large metros, income inequality levels grew the most in New Orleans (8 percent), Salt Lake City (7 percent), Jacksonville (7 percent), and Atlanta (6 percent).
The biggest declines were also in smaller metros. Inequality fell 10 percent in Mount Vernon-Anacortes, Washington, and other large drops could be found in metros throughout South Carolina, Kentucky, Iowa, Wisconsin, and Texas.
These maps show that income inequality has risen in roughly two thirds of all U.S. metros, both large and small. While we typically think of inequality as being worse in the larger, more affluent knowledge and tech metros of the East and West coasts—along the Boston-New York-Washington corridor, the San Francisco Bay Area and L.A.—inequality has been growing rapidly in smaller metros in the Sunbelt, Midwest, and Great Plains. If the recession has taught us anything, it's that inequality is not a problem confined to just one part of America. Instead, it’s an issue that the entire nation will have to acknowledge and tackle.